Feb 2 – Feb 6, 2026
Time to Reset
by Nick Schmidt · February 7, 2026
Since October we've continued to see good news and good earnings being sold into. That pattern alone tells you the environment is not healthy for swing trading and either a correction is coming or we keep chopping.
The action has just been poor for months now. Important leading stocks like PLTR and HOOD have broken down, and the environment has been tough and choppy and volatile. This week I went fully to cash and honestly I think a mental reset is what I need most right now.
GOOGL reported great numbers Wednesday night and got sold into initially Thursday morning but then bounced and held showing relative strength. I used that bounce to exit my remaining position and go fully to cash rather than wait around. Friday had a really strong bounce and QQQ defended the 30-week moving average which felt encouraging on the surface. But this time last year we had a very similar bounce at the 30-week with the same kind of negative sentiment and leadership breakdowns and that ended up following through to the downside. It doesn't mean it plays out the same way, we could still go sideways or higher from here, but the similarity is hard to ignore and it's what I'm watching most closely heading into next week.
I've done a decent job protecting my financial capital through all of this but not my mental capital. Clearing my head is the priority right now.
Current Holdings
0% invested|100% cash
SymbolAvg CostLastP&L
100% cash.
Day by Day
Monday
—Holding Through the Noise2026-02-02No trades, held TSLA 20% and GOOGL 20%. Opened under pressure and TSLA worked down to the same level we've been supported at a few times now and held. GOOGL making new highs ahead of Wednesday earnings. Within growth itself some names are making highs while others in similar groups are down 40% and that contrast is what makes this environment feel so difficult to navigate. Separately XLE breaking out of a 4-year base and energy looks like the clearest theme right now.
Real-time posts from this day (3)
Tuesday
—Survived by 20 Cents2026-02-03TSLA nearly stopped me out by about 20 cents. Nasdaq down 1.5% and somehow both positions held. The real insight from today was recognizing how this environment trains you to buy every dip because each time it looks like its over we chop back up. That pattern is what makes it so dangerous because by the time it actually breaks down everyone is conditioned to buy and they get caught. Zero trades placed and felt good about that.
Real-time posts from this day (3)
Wednesday
—De-Risk Day2026-02-04GOOGL reporting after the bell and I had to decide how much gap risk I was willing to take. TSLA undercut the wick level I was using as support and it wasn't worth giving it more room in this environment so I sold it. Trimmed GOOGL from 20% down to 5% ahead of the report. Tried a small XLE position. PLTR confirmed the pattern with a great report getting sold into which is now multiple high-quality names being punished on good earnings and was the biggest reason I didn't want to hold much into the close.
BoughtXLE (Small position, fresh 4-year base breakout)
SoldTSLA (Ahead of GOOGL earnings uncertainty), GOOGL (20% to 5% ahead of after-hours report)
Real-time posts from this day (4)
Thursday
—The Final Straw2026-02-05GOOGL's initial post-earnings reaction was ugly, it sold off all the way down almost to my entry. Then it immediately bounced and held showing real relative strength. But rather than stick around and hope I used that bounce to exit my remaining position and go fully to cash. Sold XLE too. Tried a quick SQQQ fade trade out of boredom and immediately recognized it as busy work I shouldn't be doing. The one takeaway worth noting: TSLA is showing serious relative strength while prior leaders are down 40%+ from highs. If we get a real correction and TSLA holds these levels it becomes the #1 focus when things turn.
BoughtSQQQ (Small fade trade)
SoldGOOGL (Remaining 5% after post-earnings selloff), XLE (De-risked to fully cash), SQQQ (Closed quickly, busy work)
Real-time posts from this day (3)
Friday
—Watched the Bounce2026-02-06All cash, no trades. I was expecting some kind of bounce because of how negative sentiment had gotten and how clearly bad things looked but I was honestly surprised by how strong it was and how it closed near the highs of the day. The FOMO was real. But I needed the weekend to reset and placing a trade out of FOMO and frustration is not a good foundation to start a position on. One bounce doesn't negate all the negative action and wide ranges and broken charts we've been dealing with.
Real-time posts from this day (2)
Lessons
01
Good earnings being sold into is a warning sign
GOOGL recovered after its initial post-earnings selloff but the broader pattern since October has been clear: good news and good earnings are being met with selling across most names. PLTR and others have been punished on strong reports. What you want to see to know the environment is changing is either bad news not getting sold hard or good earnings turning into powerful gaps higher that hold. We aren't seeing that yet.
Rule:Watch how the market treats good news. In a healthy environment good earnings lead to gaps that hold and build on. In an unhealthy one they get sold into. That reaction tells you more about the environment than any indicator.
02
Stocks set up over and over again
I used to think that if I missed a move the opportunity was gone forever but stocks set up over and over again and you just have to be patient. This is especially important right now because the FOMO of watching things run without you is what pulls you back in too early. Every name on the watchlist will give another chance and if it doesn't there will be something else.
Rule:There is no last opportunity. The urgency feeling is a red flag not a signal to act. Let stocks come to you.
03
Surviving is the only goal in bad markets
If you can survive in bad markets then you are ahead of most traders and it's mathematically in your favor. All you need to do is survive and most never can do that. The goal right now is not to make money it is to keep the account whole and keep confidence intact so when the environment shifts you are ready to go not digging out of a hole. How well I handled last January through March was directly related to doing well when things turned up in April. I was confident and ready.
Rule:Capital preservation and confidence preservation. The best thing mathematically for long-term compounding is minimizing drawdowns during tough stretches so you can compound from a higher base when conditions improve.
04
In this market if you want to participate you have to buy quiet or buy weakness
TOL had a cup and handle pattern with a couple tight ranges within the handle which is what I consider quiet. If trying to hold a swing in this environment being disciplined to only buy when it's quiet like in that green box close to a logical stop (the red line) is kind of the only way to have a chance. The ranges we are seeing right now are 10%+ moves up and down during the day in stocks and just buying strength is almost guaranteed to chop you up and not allow you to hold. Even if the market doesn't break down from here the wide ranges alone make it so that the only way to survive a position is to get in near support where your stop is tight and you can handle the volatility.
Rule:In choppy markets the only entries with a chance of working are on quiet days near support. If you can't get in on weakness skip it and wait for the next one.
05
Profitable trades can still be busy work
The SQQQ trade Thursday was profitable but I called it busy work and something I shouldn't be doing. When you are supposed to be sitting on the sidelines and you start taking little trades just to feel active that is the chop pulling you back in. A trade doesn't have to lose money to be a bad trade if it goes against your process and just keeps you engaged when you should be resting.
Rule:Not every profitable trade is a good trade. If the trade isn't part of your system and you're just doing it to feel active it's a leak. Be honest with yourself about why you're clicking buy.